Key Takeaways:
- Your life insurance cost depends on your unique situation — everyone has different life insurance needs, and a good monthly payment for one person may not be the same for another.
- Age, gender, health, number of dependents, occupation and income, and type of policy are some of the factors that influence how much you’ll pay for a life insurance plan.
- When figuring out how much life insurance costs, a good rule of thumb is to expect to pay about 1% of your income on term life insurance. So if you make a $50,000 salary, paying $500/year (plus or minus) would be reasonable.
Calculating your monthly payment involves comparing different policies, riders, and coverages. Start with The Ultimate Life Insurance Calculator to get a personalized recommendation for coverage.
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Most people want to be smart with their money. Because insurance isn’t a want — but a need — you want to make sure you get the best deal, just as if you were shopping for a car insurance policy.
But like a car insurance policy, where how much life insurance costs depends on your policy, coverage amounts, riders, and other factors. So, what a “good monthly payment” for life insurance is depends on your specific life circumstances.
There is no average “good monthly payment” across the board. You can look at averages in terms of age, gender, health, number of dependents, income level, occupation type, and policy type. Still, you’ll find variation when it comes to finding an affordable rate for life insurance that still offers quality coverage for your family.
7 Factors that Influence Life Insurance Premiums
Here are some general truths that may give you a better idea of how much you may pay in monthly premiums. It depends on your answers to these questions:
1. How many people rely on you for your income or support?
Life insurance is designed to replace you in terms of providing for your family if you pass away unexpectedly. No amount of money can replace your value and worth to your loved ones, but it can mean the difference in terms of their financial security.
If you pass away without enough coverage — i.e., less than enough to replace your lost income and insurance benefits, and to cover your debts and funeral costs — you may leave your spouse, children, or parents without the money they need to support their lifestyle.
The more people who rely on you, the more coverage you need to have, and the higher your monthly payment may likely be.
2. How much do you make annually?
As we just discussed, life insurance is to help replace your income if you pass away prematurely. The more you make, the more coverage you’ll need, and the more you can expect to pay in monthly premiums.
3. How risky is your job and hobbies?
Insurance is all about balancing risk. The higher the risk, the higher the life insurance cost. It’s the same way car insurance works — younger drivers in populated areas with accidents in their history will pay more, because they are more likely to file a claim.
For example, if you like to go skydiving or work in a dangerous job like roofing or construction, you’re more likely to suffer injury or death compared to those with desk jobs and crocheting hobbies. Your risk is higher, so you can expect your monthly premiums to be higher as well.
How much life insurance costs for you will not be the same for your friends who are the same age with the same number of dependents who have a safer lifestyle.
4. How’s your health?
People with poor health, chronic conditions, or a family history of medical illness are riskier to insure. If you fall into that category, you’ll likely more per month for a life insurance policy.
Your health is actually one of the most influential factors on this list when it comes to how much life insurance will cost you!
The underwriting process (evaluating your health and other risk factors) typically involves a medical exam. However, if you are in poor health or don’t want to disclose your health information, you may opt for a non-medical life insurance plan that’s easier to qualify for. These types of guaranteed-issue policies skip the underwriting process and charge higher fees.
5. How old are you?
Age can influence how much you’ll pay for your plan. The younger you are, the more coverage you’ll need (because you have a longer life ahead of you). But you’ll likely pay less for a policy because you’re less expensive to insure (because you are statistically more healthy and less likely to pass away than someone older than you).
Buying a life insurance policy earlier in life means that you can expect a “good monthly payment” to be cheaper than if you wait to purchase a plan in your middle-age or elderly years. For example, a 23-year-old will probably pay less for coverage than a 43-year-old.
6. Are you male or female?
Gender affects your life insurance cost. In most states, men pay higher premiums than women, even for the same amount of coverage.
7. What type of policy are you buying?
Life insurance has many different options. However, plans are divided into two major categories:
- Term life plans
- Whole life (or permanent life) plans
Permanent life policies offer protection for your entire life. No matter when you die, your policy pays a death benefit to your beneficiaries.
On the other hand, term life policies only protect you for a set amount of time, typically between 10 to 30 years. Because term life plans are simpler and shorter, they cost less than permanent life plans.
How Everyday Life Saves You Money on Life Insurance
There’s one other major factor that influences what a “good monthly payment” is for your situation — the insurance company you choose.
Everyday Life is the best choice for the savvy consumer who wants to save the most on their term life policy. Our smart term life plans use Predictive Protection™ technology to discover exactly how much coverage you need right now, and then automatically adjust that coverage over time based on major life events.
For example, if you have young kids, you’ll need more coverage during this stage in your life, and you’ll have to pay a higher premium. But when your kids are closer to moving out, you won’t need as much coverage — so, you shouldn’t pay the same amount!
Our proprietary technology prevents you from overpaying for unnecessary coverage. We decrease your premiums to reflect your real life needs. This stops you from ever paying for more coverage than you absolutely need and can save you thousands over the life of the plan.
Calculate Your Quote Today
In order to determine how much life insurance costs for your specific needs, compare different policies online in minutes. Use The Ultimate Life Insurance Calculator and get your personalized recommendation for coverage and get matched to a policy.
Simply enter a few details (no phone number or address required) and find out what your dynamic policy could save you!
